Jefferies: China Alternative Energy - Sunwoda 1Q26 Missed on Surprise FX Losses; Shipments and Margins Solid, Downgrade to Hold
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Jefferies downgraded Sunwoda (300207 CH) from Buy to Hold, lowering the target price from RMB 29 to RMB 25 based on 20x 2026E P/E. This revision follows 1Q26 results that missed expectations, primarily due to an unexpected RMB 320 million foreign exchange loss that caused net profit to plummet 70.5% YoY to RMB 114 million.
Despite the bottom-line miss, underlying operational metrics remained solid. 1Q26 revenue surged 31% YoY, driven by robust electric vehicle and energy storage system sales. The EV and ESS segment's revenue contribution expanded from 30% in 2025 to 35% in 1Q26, while segment gross margins improved to 14-15%. Management raised the 2026 EV and ESS shipment target to 90GWh, representing roughly 2.1 times the 2025 volume. Consequently, 2026 EV battery revenue is projected to exceed RMB 30-40 billion, growing over 59% YoY. The ESS systems business is also gaining traction, with current orders representing three to five times existing capacity.
However, Jefferies highlights persistent headwinds, including stagnant consumer battery revenue, surging lithium prices, and ongoing FX risks exacerbated by a lack of effective hedging instruments. Furthermore, inventory levels doubled from RMB 7 billion in early 2025 to RMB 14 billion by the end of 1Q26. Given the lack of immediate re-rating catalysts and the squeeze on near-term profitability, Jefferies cut its 2026-2027 earnings forecasts by 10-15%. The target price of RMB 25 implies approximately 16% downside from the current price of RMB 29.78.